Ives gives SpaceX (SPCX.US) to “outperform the market”, target price of $225: issuing bonds to lock in Nvidia chips can strengthen AI flywheels

The Zhitong Finance App learned that investment company Yorkville Ives said that SpaceX (SPCX.US) may raise $40 billion in debt to buy Nvidia (NVDA.US) chips, which is a “smart strategic move” for the company led by Musk.

Yorkville Ives analyst Dan Ives wrote in a customer report released on Wednesday: “We believe this is a smart strategic move for SpaceX's expansion because it will reinforce the flywheel effect between launch, Starlink, and AI: each business is reducing costs or increasing demand for the other two businesses, and the AI sector is where the next phase of growth is taking place — the contracted cloud capacity will be converted into revenue.”

Ives gave SpaceX an “outperforming market” rating, with a target price of $225.

According to reports, SpaceX is seeking to raise $40 billion in a funding round led by Apollo Global Management (APO) to purchase Nvidia chips. The company plans to raise about $10 billion in bank loans and $30 billion in investment-grade debt to finance this massive chip order.

Apollo is expected to lead the deal and help sell this debt to a broad investor base. Bond giant Pacific Investment Management (Pimco) is one of the few lenders involved in financing negotiations. The transaction is expected to close in 2027.

Ives further analyzed that Musk and SpaceX clearly need to act quickly. Given the speed and scale of SpaceX's upcoming cloud data center AI construction, he believes this financing will receive a “good response” from investors.

He added: “The sector is constrained by supply rather than demand, so the question is always how fast SpaceX can bring computing power online and how to pay for it. Using debt rather than equity to lock in Nvidia's chip supply is a more capital-efficient answer: it avoids returning to the equity market just four months after the June IPO, provides funding for production capacity already contracted before delivery, and can start generating revenue immediately after electricity is turned on, thus turning bottlenecks into planned construction.”